MA: Marijuana Regulators Strike Licensing Compromise

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State regulators voted Monday to limit the roll-out of recreational marijuana sales in July, postponing licensing of home delivery services and pot lounges while allowing retail pot shops and their suppliers to open in July as scheduled.

The Cannabis Control Commission had been under pressure to delay delivery and “social consumption” operations from Governor Charlie Baker and other political figures, law enforcement officials, and medical marijuana business interests, who had argued the nascent agency was trying to do too much at the outset and would struggle to oversee so many different types of operations.

“The administration is pleased that the commission has decided to primarily focus on establishing safe and responsible regulated retail sales as Mass. continues to implement this law,” Baker said in response to the vote.

The agency’s five commissioners, however, insisted they were not bowing to the governor, but rather they needed more time to work out rules aimed at preventing impaired driving, underage sales, and other complexities.

In voting for the delay, they simultaneously pledged to have regulations for delivery and social consumption outfits ready within a year — and, in a major concession to activists, only grant those licenses to people affected by the War on Drugs.

“I was willing to defer,” said commission chair Steve Hoffman, “but I was only personally willing to do so if we put an explicit timeline in place to address these issues, and we did. …I thought it was a great compromise.”

Hoffman also struck back at the suggestion by Baker and others that allowing the licenses immediately would have overwhelmed his agency.

“I reject the argument that we can’t do it in time,” Hoffman said. “Had this decision gone differently and we had voted to do delivery and social consumption, I’m totally confident in the commission’s ability to process those applications and regulate those businesses after that.”

The vote was a setback for those who wanted an immediate roll-out of delivery and social consumption licenses. But activists managed to salvage a major concession when the commission voted 4-1 to grant those licenses, when they become available in 2019, at first only to those with convictions for drug crimes in the past, or closely related to someone with convictions, or who lived in areas with high numbers of arrests for drug offenses — mostly minority neighborhoods that were identified through a study of arrest rates and other data.

Commissioner Kay Doyle was the lone no vote. Earlier, she expressed concerns about oversight of delivery operations.

“I am concerned about ID-checking,” Doyle said. “We may not have sufficient staff to [monitor] compliance.”

Activists had argued Baker’s delay would violate a cornerstone principle of the state’s marijuana law: creating a broad, accessible industry that gives people swept up in the pre-legalization “war on drugs” opportunities to profit now that cannabis is legal.

“The major problem with delaying these licenses is the effect it will have on the opportunity for equitable market participation in this industry,” said Commissioner Shaleen Title, who was a long time activist before her appointment last year. “If we were to delay these licenses without intentionally addressing these consequences, we would be violating our clear instructions to promote the inclusion of people from disproportionately harmed communities.”

The solution, she added, was “to control the market opportunities so that [smaller participants] don’t get ignored and left behind yet again.”

Delivery services and social consumption places would be far less costly to get underway than a retail shop or large cultivation operation, activists argue, making them appealing to entrepreneurs who don’t have the backing of major investors. They also said that banning social consumption venues would leave tenants of rental apartments and subsidized housing with nowhere to legally consume the drug, potentially exposing them to eviction.

Under the compromise, two other categories of small marijuana businesses — “craft” cooperatives of marijuana growers and “microbusinesses” that can only produce small amounts of marijuana and edibles — would also be allowed to deliver when the licenses are issued next year.

But retail pot shops, larger growers, and manufacturers of edibles and other cannabis products could not offer delivery services of their own for a period to be defined — perhaps as long as five years — meaning they would have to partner with one of the so-called “equity” businesses.

“No small business or equity applicant would have even had product ready to deliver until close to the end of the year, so starting everything at the same time would have let the established, well-financed dispensaries corner the market,” said Shanel Lindsay, a cannabis business owner and activist. Now, she said, “we actually have a chance for equity and meaningful participation by small businesses. This is much better all around.”

The industry group representing medical dispensaries, which argued the delay would help ensure a smoother start to retail sales, questioned why its members would be excluded from offering delivery services if they were licensed to sell marijuana to consumers in addition to registered patients.

“On the surface it seems pretty arbitrary and possibly discriminatory,” said David Torrisi, a former state legislator and executive director of the Commonwealth Dispensary Association. “I don’t think the government should be in the business of matchmaking business partners.”

The commission on Monday also voted unanimously to add an explicit consideration of race as one possible criteria for another equity program that grants faster review of license applications to businesses that benefit communities disproportionately affected by drug arrests.